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Journal of Economic Geography Advance Access originally published online on September 28, 2006
Journal of Economic Geography 2006 6(5):593-617; doi:10.1093/jeg/lbl018
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© The Author (2006). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

The spatial income structure in the European Union—what role for Economic Geography?

Holger Breinlich*

* London School of Economics, Centre for Economic Performance and University of Essex, Wivenhoe Park, Colchester CO4 3SQ, United Kingdom. email <hbrein{at}essex.ac.uk>

Regional per capita income levels in the European Union display large variations and a strong centre-periphery gradient. This paper examines to what degree proximity to markets can explain this pattern. Using a New Economic Geography model, I derive an econometric specification relating income levels to a trade cost and price index weighted sum of the surrounding locations' GDP. I estimate this specification for a sample of 193 EU regions for 1975–1997 and find an important role for market access. However, its main benefits seem to come from increased incentives for physical and human capital accumulation and not from direct trade cost savings.

Keywords: economic geography, international trade, regional integration, EU,
JEL classifications: F12 ,F15, R11, R12
Date submitted: 11 May 2005     Date accepted: 9 August 2006


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